Expert Answers

Question 1

Cost allocation is: The process of tracking both direct and indirect costs associated with a cost object The process of determining the actual cost of the cost object The assignment of indirect costs to the chosen cost object A function of cost tracing

Question 2 Which one of the following items is a direct cost? Customer-service costs of a multiproduct firm; Product A is the cost object. Printing costs incurred for payroll check processing; payroll check processing is the cost object. The salary of a maintenance supervisor in a multiproduct manufacturing plant; Product B is the cost object. Utility costs of the administrative offices; the accounting department is the cost object. Question 3

Question 9 The actual indirect-cost rate is calculated by: Dividing actual total indirect costs by the actual total quantity of the cost-allocation base. Multiplying actual total indirect costs by the actual total quantity of the cost-allocation base. Dividing the actual total quantity of the cost allocation base by actual total indirect costs. Multiplying the actual total quantity of the cost allocation base by actual total indirect costs. Question 10 O'Reilly Enterprises manufactures digital video equipment. For each unit $2,950 of direct material is used and there is $2,000 of direct manufacturing labor at $20 per hour. Manufacturing overhead is applied at $35 per direct manufacturing labor hour. Calculate the cost of each unit.

A. $4,950, B. $9,950, C. $8,450, D. $11,950

Question 11 Joni's Kitty Supplies applies manufacturing overhead costs to products at a budgeted indirect-cost rate of $60 per direct manufacturing labor-hour. A retail outlet has requested a bid on a special order of the Toy Mouse product. Estimates for this order include: Direct materials $40,000; 500 direct manufacturing labor-hours at $20 per hour; and a 20% markup rate on total manufacturing costs. Manufacturing overhead cost estimates for this special order total:

One large cost pool Homogenous activity-related cost pools Activity-cost pools with a broad focus activity-cost pools containing many direct costs Question 16 Activity-based costing systems provide better product costs when they: Employ more activity-cost drivers Employ fewer activity-cost drivers Identify and cost more indirect cost differences among products Always yield more accurate product costs than traditional systems Question 17 Quality management provides an important competitive edge because it: Reduces costs Increases customer satisfaction Often results in substantial savings and higher revenues in the short run All of these answers are correct. Question 18 An example of a nonfinancial measure for customer satisfaction is: Average manufacturing time for key products Contribution margin Percentage of products that fail soon after delivery Number of employees trained on managing bottleneck operations Question 19 A tool which indicates how frequently each type of defect occurs is a: Control chart Pareto diagram Cause-and-effect diagram Fishbone diagrams Question 20 An important difference between financial measures of quality and nonfinancial measures of quality is that: Financial measures of quality tend to be useful indicators of future long-term performance, while nonfinancial measures have more of a short-term focus Nonfinancial measures of quality tend to be useful indicators of future long-term performance, while financial measures of quality have more of a short-term focus Nonfinancial measures are generally too subjective to have any long-term value None of these answers is correct.

What is the cost driver rate if manufacturing overhead costs are considered one large cost pool and are assigned based on 12 million pages of production capacity? A. $0.10 per page B. $0.07 per page C. $0.70 per page D. $0.05 per page